UK: Construction, Development & Infrastructure Cross Border Practice - July 2009

Salans – Fluent In Real Estate

Founded in 1978, Salans is a fully integrated international law firm with over 750 attorneys in 21 offices worldwide. Salans has a leading reputation in emerging markets and in all aspects of real estate.

Global Reach

Salans, a fully integrated and truly international law firm with strategic focus on emerging markets, has over 750 lawyers and more than 500 supporting staff.

We boast one of the largest real estate practices among international law firms, with a dedicated team of over 200 real estate and real estate finance professionals across 21 offices. The real estate practice at Salans is not only sophisticated and diversified but also has a leading reputation in emerging markets.

"Salans has the global reach necessary to serve single country and cross- border real estate investors."

Eric Rosedale
Co-Chairman,
Global Real Estate Group

Members of Salans' Global Real Estate Group (GREG) handle all aspects of real estate transactions in virtually all major real estate sectors, including offices, hotels, warehouse and distribution facilities, large-scale residential developments and infrastructure projects.

Clients of the Global Real Estate Group include many of the world's leading institutions, international developers, banks, private equity houses, and multinational corporations.

Today's complex global real estate markets require the ability to provide a unique blend of real estate, M&A, finance, corporate and commercial advice in a rapidly changing legal environment, which is often multi-jurisdictional in nature. To do this successfully requires the combination of cross-border legal expertise with practical local experience - this being the foundation of our practice and why we have created dedicated real estate "sector groups".

"Our founding vision was to create a true international law partnership based on mutual cooperation, team spirit and a multicultural openness. Today, Salans is a truly international firm that acts as a bridge between different cultures."

Salans at a glance

• 750 lawyers (183 partners)
• 30 languages
• 20 nationalities
• 21 offices
• one firm
• one approach

The "CDI" Cross-Border Practice is one of the sector groups within Salans' Global Real Estate Group, which is made up of over 200 real estate specialists. It comprises more than 65 dedicated lawyers and delivers cross-border and industry-specific advice.

THE CONSTRUCTION DEVELOPMENT AND INFRASTRUCTURE CROSS-BORDER PRACTICE

CDI Team Worldwide

Our CDI Team is co-led by Xavier Poulet- Mathis and Julian Booth, both international lawyers based in Salans' Moscow and London offices. It is fully integrated within our Global Real Estate Group encompassing real estate, corporate, tax, employment and banking & finance staff from each office resulting in a truly extensive global real estate legal network.

Currently, the CDI Team comprises more than 65 dedicated lawyers worldwide, including over 20 Partners and Counsels specialising in this sector.

CDI Sector Practice

• Our practice encompasses all phases of construction and development, including initial land use planning and zoning, construction (including procurement methods), financing and development management.
• We are experts in handling international construction matters for all types of clients and involving all types of projects.
• We are fully focused and responsive to our clients' commercial goals and we bring to each transaction astute commercial awareness combined with the highest international standards of legal analysis and documentation.
• We have a dedicated global dispute resolution practice experienced in dealing with all types of disputes which may arise from construction and real estate matters.

Construction – A pioneer on emerging markets

Salans' CDI attorneys have decades of experience in drafting, negotiating and advising on a wide range of constructionrelated documentation, such as domestic and international construction contracts, project management services' agreements, consultant appointments, collateral warranty agreements, performance bonds, parent company guarantees, funding and development agreements, concession agreements, jointventure structures, agreements for leases and letters of intent. Our services to developers range from providing advice in respect of specialised regional due diligence to resolving technical, legal, environmental and permit/planning issues.

Several members of the CDI Team based throughout Salans' global offices are dedicated to assisting their clients on FIDIC-based procurements. They work together to ensure that all multi-jurisdictional and country specific aspects of a particular project are fully considered to provide the best procurement solutions to their clients.

Furthermore, Salans has been pioneering on the emerging markets' Public Private Partnership ("PPP") scene as its client "Nevsky Meridian", a consortium comprised of Bouygues Travaux Publics, Hochtief, Strabag, Basic Element, Egis and Mostootryad 19, was awarded with the concession for construction and operation of the Western High-Speed Diameter Toll Motorway (WHSD), the largest PPP project of its kind ever undertaken in Russia.

Development

Thanks to our broad experience in leasing and asset management, development, jointventures, real estate outsourcing, and regulatory land planning, our sector team are involved in the largest projects across all sectors of the real estate business on a day to day basis from the conception of the project to its operational maturity.

Our capacity to satisfy global standard expectations from international real estate players with innovative solutions and our profound knowledge on a local level is a major advantage for our clients to successfully achieve their multi-jurisdictional projects.

Infrastructure

Infrastructure is a core development sector for Salans as we are currently involved in groundbreaking projects in Russia, France, the CEE regions, Africa, Spain and the U.K. We have particular experience relating to transport, water utilities, oil & gas, rail and stadiums.

Our extensive capabilities in infrastructure projects are strengthened by the close cooperation between our following global practice groups, giving us a unique combination of outstanding expertise and experience:

• our global Public Private Partnerships (PPP) practice led by highly recognized practitioners in France, the U.K., Spain and Russia. Our PPP practice has, for instance, been ranked as number 1 in Russia by Chambers Europe 2009;
• our highly regarded Global Real Estate Group (GREG) led by Eric Rosedale and Evan Lazar. In this regard, our GREG Construction, Development and Infrastructure (CDI) sector group includes more than 65 lawyers with a specialist expertise regarding the procurement of infrastructure projects, especially those involving "FIDIC" based construction agreements;
• our global Dispute Resolution practice led by highly regarded practitioners in numerous jurisdictions, who have built an impressive and enviable record regarding international infrastructure disputes. For instance, where a dispute may be governed by English law, this will be led by our English law infrastructure dispute expert, George Burn, who is recognised by both Chambers and Legal 500 as being a "leader" in his field.

This combination of expertise and experience allows us to take an active part in the major infrastructure developments to come, both in mature and emerging markets.

Dispute resolution

We have an extensive global network of lawyers who specialise in litigation and international arbitration. These lawyers are not only expert in the resolution of disputes, they can also make a valuable contribution at earlier stages, from assisting on the structuring, negotiation and drafting of agreements, to advising on the management of risk on the operation of a project.

The philosophy is to work with clients to get the best outcome for a client. Speed and costeffectiveness are crucial elements for achieving a commercial result. This can mean negotiating an early settlement, or going to a non-binding form of dispute resolution (dispute adjudication boards, mediation etc) or taking a dispute to full-blown arbitration or litigation. We are experienced in handling disputes in all these ways, and the focus is always on securing the optimum outcome for our clients.

OUR GLOBAL NETWORK AND FOCUS ON EMERGING MARKETS

Western Europe

Salans in Western Europe is present in France, the UK, Spain and Germany. Salans began 30 years ago in Paris and to this day provides market-leading real estate, dispute resolution, EU competition, tax, banking & finance, employment and corporate advice across a range of business sectors.

Central and Eastern Europe

With offices in Warsaw, Prague, Budapest, Bucharest and Bratislava, Salans has one of the most extensive office networks in Central and Eastern Europe among international law firms.

Salans covers all aspects of corporate and commercial law in several CEE jurisdictions but is most highly rated for its leading real estate practice in the region. We have exceptionally strong capabilities in CEE and, given the range and depth of the Global Real Estate Group's experience, serve both single country and cross border investors.

Each regional CEE office is able to draw upon the experience and knowledge of offices from neighbouring countries and closely collaborate on cross-border matters for multinational clients.

Russia/CIS

Salans has been a pioneer in providing legal services in the former Soviet Union since the 1970s, when some of its lawyers began representing major international companies during the period of the first US-Soviet détente. The firm is widely recognized for its high quality of service, commitment to clients' interests, international expertise and in-depth knowledge of Russian law.

With offices in Moscow, St. Petersburg, Kyiv, Almaty and Baku, Salans has one of the most extensive office networks in the CIS, which reflects our long-term commitment to the region. The firm's CIS practice is composed of more than 130 Western-trained and locally qualified practitioners that specialize in all aspects of doing business in the region.

This allows our clients to access a wealth of on-the-ground local talent and experience.

China

In Asia we have offices in Shanghai, Beijing, and Hong Kong. Salans' Shanghai office was one of the first international law practices to be licensed in the city. It consists of nearly twenty highly experienced bilingual lawyers who combine in-depth knowledge of local real estate market laws and customs with extensive international legal expertise.

Our Hong Kong office provides a "gateway" into China for offshore real estate investors and capital providers, with a focus on investment banks, funds, lenders and large corporations. Our Beijing office, working closely with our Shanghai, Hong Kong and other international offices, offers clients contacts to central government authorities as well as to the headquarters of major Chinese banks and construction companies.

Asia/Gulf Network

As part of our focus on emerging markets at Salans we have built a network of associations with law firms and other consultants in Southeast Asia, India and the Gulf. This network enables Salans to advise on cross border transactions which are increasingly interconnected between China, India and the Gulf.

"In terms of size, strategic positioning and aims, Salans has pitched itself just right"
Chambers Europe 2007

"The firm is a 'go to' law firm for many international corporations seeking to move into emerging markets for the first time"
Chambers Europe 2009 "

...energetic, thorough and devoted lawyers who combine prompt and accurate guidance with clarity in communications with clients"
Chambers Europe 2008

Recent Global Awards

Winner of Central & Eastern Europe Law Firm of the Year at the Chambers Europe Awards for Excellence 2009.

In October 2008, for the second year in a row, the Salans' real estate practice won Euromoney/Liquid Real Estate magazine's Best Legal Services Provider Award in Emerging Europe.

In February 2008 Salans won the CEE Quality Award as Top Real Estate Legal & Consulting Firm of the Year in Central and Eastern Europe.

Our renown and the high quality of our services has been recently confirmed by our position among the finalists in the 2008 and 2007 "International Law Firm of the Year" award organised by the reputable professional journal "The Lawyer".

In 2007, the Shanghai office received the China Firm of the Year for Tax granted by "Asian- Counsel".

In 2006 the Prague office, and in 2006 and 2007 the Warsaw office received the "Client Choice Award" granted by the International Law Office, and in 2005 "Chambers Global" Guide selected Salans for the "Eastern Europe Law Firm of the Year" Award.

CONSTRUCTION DEVELOPMENT AND INFRASTRUCTURE EXPERIENCE:

We have acted as advisors to numerous real estate development and construction projects in emerging markets, primarily focusing on the drafting, amendment and negotiation of all types of development and construction related agreements, such as:

• Construction Contracts: both domestically or internationally based in either bespoke or standard forms (with a predominant expertise and focus on "FIDIC" international forms of contract);
• Development and Project Management Agreements;
• Letters of Intent, Funding Agreements and Joint-Venture Structures;
• Forms of Security, including Performance Bonds, Parent- Company Guarantees and Collateral Warranties.

Examples of our recent experience are set out below:

Construction Contracts:

• Drafting, negotiating and advising a contractor client on a FIDIC "Multilateral Development Banks Harmonised Edition" form of construction contract with the Southern Sudanese Government for the construction of a major road in Southern Sudan;
• Representing a major US real estate company on the drafting and negotiation of a turn-key design and build contract based on the FIDIC Silver Book model for a 60 million EUR logistics park in Ukraine;
• Advising a leading Russian developer on the drafting of standard tender documentation based on the FIDIC Yellow Book model for future business park projects in the Moscow Region;
• Advising a leading German developer on the drafting and negotiation of special conditions for a turn-key design and build contract based on the FIDIC Orange Book model for a commercial gallery in Yaroslav;
• Representing a major Korean car maker on the drafting of a design build contract based on a FIDIC model of contract for a St. Petersburg car plant; structuring the relations with the contractors and investors; and advising on various construction issues;
• Representing a major US company regarding a EUR 40 million warehouse development in Moscow: instructed on advising/drafting/negotiating a FIDIC Red Book model contract;
• Advising a Russian Investor on a warehouse project in Tomilino, Moscow Oblast, on critical issues relating to a bespoke contract based on the FIDIC Silver Book model contract;
• Advising a major Maltese hotel developer on the preparation of a tender for a construction contract based on the FIDIC Red Book model contract for the development of a 5 star hotel and commercial complex in St. Petersburg.
• Advising a leading industrial equipment and machinery producer on the preparation of a tender for a turn-key design and construction contract based on the FIDIC Silver Book model for a plant in China.

In addition to FIDIC forms of contracts, we also have particular expertise in the drafting, amending and negotiation of international bespoke design and build contracts:

• Representing a major German chemical industry company in the optimization and negotiation of a design and build contract for a chemical plant in the Shanghai region, China;
• Representing a US Real Estate Fund in the negotiation of a design and build contract provided by Turkish contractor Renaissance Construction, related to the construction of a retail complex in Turkey;
• Representing a US Real Estate Fund in the negotiation of a design and build contract provided by Turkish contractor Renaissance Construction, related to the construction of a retail complex of more than 165,000 sq. m. in Novosibirsk;
• Advising a Turkish contractor on critical issues relating to construction of Ikea Mega shopping malls in Samara and Ufa. The contracts being based on the Swedish ABT 94 construction agreement model;
• Advising a Russian Investor on the provisions of a bespoke design and build contract related to the construction of a shopping mall in Ulyanovsk;
• Representing different French luxury groups in drafting and negotiating design and works agreements for fitout works of luxury stores in Moscow, St. Petersburg and Yekaterinburg;
• Advising a Turkish contractor on a design and build construction contract for a major business complex tower in Moscow City;
• Representing a major UK producer of razor blades on the drafting and negotiating of a construction contract for a St. Petersburg plant;
• Advising a major Turkish contractor on a construction contract for the construction of the Third Terminal of Sheremetievo Airport in Moscow;
• Drafting a construction contract and architectural consultant design appointment for a major UK retail company for the construction of a chain of DYI stores in St Petersburg;
• Representing a major Russian contractor regarding the construction contract for the construction of an oil pipe-line in Siberia;
• Advising a leading Israeli developer in the drafting of a construction contract and architectural design consultant appointment for the development of a warehouse complex in Saratov;
• Advising the oldest UK tailoring company on various issues relating to the reconstruction of an office and retail building of historical significance in the centre of St Petersburg, including advising on critical issues arising from the investment agreement and the construction contract with the general contractor.
• Advising in respect of licensing, documenting and construction of a power plant in Qatar;
• Advising a multinational energy company on the development of a cracker plant in Qatar;
• Advising an international private equity fund on the acquisition of a Greenfield site for development of a logistics warehouse, involving the drafting and negotiation of a bespoke construction contract;
• Advising an international tobacco company in Ukraine on the construction of a USD 100 million industrial facility;
• Advising major international grain commodities traders on the construction of Ukrainian port facilities and reclamation of waterfront land;
• Providing advice on a bespoke construction contract for the repair and reconstruction of Ukrainian oil wells;
• Advising a leading luxury goods company regarding its construction contracts for the procurement of retail outlets in Ukraine;
• Advising a leading global supplier of technological-advanced automotive systems on their acquisition of the granted use-right of Chinese industrial land with a land grant premium of RMB 10 million and the following construction of a building on the land with a contract value of RMB 53 million;
• Advising a leading global chemical products manufacturer on its purchase of the granted use-right of Chinese industrial land with a transfer price over RMB 80 million and the following construction of a chemical production facility building on the land;
• Advising a leading furniture producer on setting up a wholly foreign owned enterprise ("WFOE"), acquiring land use-right and concluding the construction contract in Shanghai, China. The land is over 10,000 square metres and the total deal value is more than RMB 50 million;
• Advising a leading battery producer on setting up a "WFOE" and acquiring land use-right and concluding the construction contract in Hubei, China. The land is over 60,000 square metres and the total deal value is more than RMB 60 million;
• Advising a German based producer of technical textile on its construction contract and related construction management, supervision, design and procurement contracts for its China plant with a value of approximately RMB 60 million;
• Advising a German construction contractor regarding their engagement as general contractors by various project owners throughout China.

Development and Project Management Agreements:

• Drafting and negotiating a Project Management Services Agreement for a US / Dutch real estate joint- venture for the part construction and management of a Hungarian office complex;
• Drafting and negotiating a Project Management Services Agreement for a US / Austrian real estate jointventure for the construction, development and management of a Ukrainian office complex;
• Drafting a Project Management Services Agreement for a US Real Estate Fund to cover design of "Phase P" of a warehouse complex in the Kiev region;
• Advising a leading institutional investor regarding drafting of a Development Management Agreement for a logistics park project in Krasnodar Krai;
• Drafting a Development Management Agreement for a US Investor's warehouse facility development in Novosibirsk;
• Advising a major Russian developer on key Project Management Agreement provisions based on the FIDIC White Book Consultant Model Services Agreement;
• Drafting a Development Management Agreement for leading German and Russian financial institutions for the development of a class A residential and commercial complex in St. Petersburg;
• Drafting a Development Management Agreement for a leading British Real Estate Fund for the development of a class A warehouse complex;
• Drafting and negotiating a Project Management Agreement with a leading construction management firm based on the FIDIC White Book Consultant Model Services Agreement for a Russian boutique hotel developer in St. Petersburg.

Infrastructure experience examples:

• Acting on behalf of the consortium awarded with the concession for construction and operation of the St. Petersburg Western High-Speed Diameter Toll Motorway. It is the largest PPP project of its kind ever undertaken in Russia, with a projected construction cost in excess of USD 9 billion;
• Acting on behalf of Lille Olympic Sporting Club – Lille Métropole for the construction and operation of the 50,000 seat capacity "Grand Stade de Lille Metropole" stadium. This is the first significant project in which the holder of a partnership contract under French law is constructing real estate developments annexed to the main project;
• Acting on behalf of the consortium awarded with the concession for the construction and operation of a EUR 346 million state-of-the-art incineration facility converting household waste into electrical power for the city of Baku. This will be the first project of its kind in Azerbaijan, and it represents one of the largest infrastructure projects to date outside of the oil and gas sector.

CONSTRUCTION DISPUTE RESOLUTION EXPERIENCE:

On the dispute resolution side, examples of our recent experience are set out below:

• Currently acting for a European airport in an ICC arbitration relating to the construction of a new runway and associated buildings under a FIDIC Red Book form contract. The contractors' claims USD 55 million in compensation for a range of alleged additional costs and additional time spent on the project. To date, our client, the respondent, has made counterclaims totaling USD 12 million (there may be additional counterclaims);
• Currently acting for an Australian contractor in a dispute regarding the construction of a coal-fired power station in a South Pacific country. The aggregate claims are for approximately EUR 50 million. The dispute is being dealt with through ICC arbitration in Geneva and related expert proceedings under the auspices of the local courts;
• Acted for a Kenyan employer in defending a claim brought in ICC arbitration in Geneva brought by a Japanese-led joint-venture contractor in respect of the construction of a hydro-power plant. Following the successful resolution of phase one claims for the client, the remaining disputes were referred to mediation under ICC auspices, resulting in successful resolution of all matters in dispute. The amount in dispute was approximately USD 95 million;
• Acted for an Egyptian employer in defending a claim brought via ICC arbitration proceedings in London by German contractors arising out of the construction of a steel structure for a manufacturing plant. The amount in dispute was approximately USD 45 million;
• Currently acting for a claimant in an LCIA arbitration seated in London, for the alleged negligence by architects in a construction project. The amount in dispute is approximately GBP 2 million. The dispute was also referred to mediation;
• Acted for a Korean contractor in defending a claim brought a Kuwaiti subcontractor via LCIA arbitration proceedings in London in respect of the installation of control systems at a Kuwaiti oil-gathering facility. The amount in dispute was approximately USD 15 million;
• Acted for a Dutch/Swiss employer in LMAA arbitration in London concerning a pipe-laying vessel involving issues of defective design and construction, and claims for disruption and termination. The aggregate amount in dispute was approximately USD 160 million;
• Acting as counsel to an Italian respondent in ad hoc arbitration in a dispute regarding construction of a luxury yacht. The amount in dispute was approximately EUR 7 million;
• Acted for a Japanese construction company in respect of alleged defects in a major retailer's European distribution centre. The amount in dispute was approximately GBP 7 million;
• Representation of a Canadian contractor in an ICC arbitration in Paris regarding the construction of a sulphuric acid plant in Turkey (claim circa USD 20 million);
• Representation of an Italian company in an ad hoc arbitration in Paris regarding the construction of a paper mill in France (claim circa USD 50 million);
• Representation of a French contractor in an arbitration in Stockholm under the Rules of the Stockholm Chamber of Commerce regarding the construction of a shopping mall in Russia (claim circa USD 20 million).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.